SLUSA bans class actions that are based on the statutory or common law of a state and that allege deceptive practices in connection with the purchase or sale of a covered security. The appellate court agreed with Scottrade’s position that, despite the plaintiff’s attempts to plead around SLUSA, “the core of Plaintiff’s complaint” alleged “material misrepresentations or omissions” or employment of a “manipulative or deceptive device or contrivance” “in connection with the purchase or sale of securities” such that his claims were SLUSA-precluded.

The plaintiff originally filed his complaint in the Southern District of California in December 2014, after which Scottrade filed and won a motion to transfer venue to the Eastern District of Missouri. The plaintiff, a Scottrade customer, alleged several state law claims stemming from his contention that Scottrade violated its duty of best execution by allegedly routing non-directed standing limit orders to trading venues that offered rebates to Scottrade. In August 2016, Judge Ross dismissed the plaintiff’s claims as SLUSA-precluded.

Writing for the court, U.S. Circuit Judge James Loken affirmed the lower court decision, taking the plaintiff to task for raising the “frivolous” argument that a breach of the duty of best execution is not “in connection with the purchase or sale of securities” and disagreeing with the plaintiff’s erroneous argument that the U.S. Supreme Court’s 2014 decision in Chadbourne & Parke v. Troice somehow narrowed the traditionally broad interpretation of the “in connection with” requirement.

In August 2017, the same team of Thompson Coburn attorneys obtained another victory for Scottrade when the 8th Circuit affirmed the dismissal of a data breach class action on the merits with prejudice. It was the first circuit-level opinion to squarely address the merits of a data breach class action, with the Court concluding that the plaintiffs’ allegations and purported claims of harm from the data breach were “not plausible,” “bare bones,” and “virtually unintelligible,” and writing that “[m]assive class action litigation should be based on more than allegations of worry and inconvenience.”

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